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Diane AMANCIC 29/01/2016
Essay 2 Economic Development of Africa
Dr Alice N. Sindzingre
Student number: 634791
Word count: 2408
i) Critically discuss the constraints on state intervention in Sub-Saharan Africa since
independence; ii) In view of these constraints, are the various public policies conducted by the
high-growth ‘developmental states’ in East Asia relevant for Sub-Saharan African economies?
iii) Substantiate your arguments using the example of one Sub-Saharan African country.

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Theories of economic development have to be understood since the end of World War
Two, where a great number of countries had to rebuild their economies and others travelled
from underdeveloped to developed (Adelman, 2000). Development theorists belonging to the
classical school had originally underscored the positive relationship between state intervention
and economic growth, and that there are various choices in terms of policies and institutional
reforms that would later nurture development. The view of a “strong state” as necessary to
foster growth dramatically reversed in the 1970s, with the rise of the neoclassical school which
perceived as paramount the liberalization of the economy and the reduction of state
intervention to a minimal degree. Neoclassical views fuelled the policy-making of IFIs and
constituted the ideological basis for Stabilisation and Structural Adjustment Programs that
were conditionally implemented in Latin America, Sub Saharan Africa and East Asia by the
IMF and World Bank. These “policy packages” included a set of institutional, state and market
reforms to be followed by “low-income” countries or countries that faced economic difficulty
originally in order to improve the Balance of Payments and supply sides respectively.
However, these policy recommendations comprise issues and were not always implemented in
full, with their effects greatly varying in light of the pre-existing features and constraints of the
state they were implemented in. Indeed, “East Asian developmental states” like South Korea
faced various constraints but have overcome them by partly implementing IFIs packages while
embracing the classical view of a “Strong state” towards the economy in order to promote
industrial policies and welfare-oriented reforms from 1960 onwards. However, SSA – and IFIs
– were late at realizing the rather negative results of the “minimal state” paradigm, and
important structural and institutional constraints kept most SSA countries from following the
path to development. This essay will demonstrate that public policies conducted in high-growth
“developmental states” in East Asia are relevant to SSA, even though the delay in triggering
the first phase of development along with heavier constraints on a positive intervention of the

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state in the economy make development a more difficult task for SSA countries. The case study
of the Republic of Congo will be used to illustrate arguments.
1.1. Structural and institutional constraints unfit for IFIs policy recommendations
Immediately after independence, SSA countries enjoyed high growth rates fostered by
state-owned “parastatals” exports in primary goods and commodities such as coffee, cocoa,
wood, minerals, and oil. A legacy of the colonial period, the primacy of the primary sector
rendered economies highly vulnerable to price fluctuations and external shocks worsened by
structural deficiencies. In the 1970s the world witnessed a dramatic collapse of commodity
prices and two global oil shocks in 1973 and 1979, which came at the same time than the debt
crisis in SSA. In the midst of the Cold War, SSA countries found themselves heavily indebted,
incapable of solving the debt crisis issue and lacking revenues to foster development.
Subsequently in the 1980s the IMF and the World Bank offered the same policy package that
had been recommended in Latin America (Rodrik, 2006), coined the “Washington Consensus”
by Williamson (1990). But the “commodity trap” and dependency of state budgets on the
primary sector (Rodrik, 1998) would prevent the policy package from having desirable
outcomes, and in some cases worsened the gaps between richest and poorest quintiles of the
population, along with reducing household income for the middle-class, which usually leads
the development path.
However, SSA countries lacked essential conditions necessary to implement most of these
reforms and start a virtuous growth cycle, the model that had been followed by East Asian
miracles and is made of three major phases to avoid conflict between growth and distribution
of revenues: (1) land reform before rural development; (2) universal primary education before
labor-intensive growth and (3) engineering, professional and computer education before
technology-intensive industries, each representing steps towards a sustainable diversification
of the economy (Adelman, 2000). East Asian developmental states followed this path and

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proved that industrialization is to be led by the state in the case of an export-based economy,
but in SSA state institutions are dysfunctional because afflicted with corruption, paternalism
and patron-client relationships. Furthermore, surplus revenues generated from the primary
sector are often diverted onto personal accounts instead of reinvested towards developing
another sector of the economy or social welfare. Even though East Asian and SSA regimes
could both be defined as “authoritarian”, the predatory and rent-seeking tradition of SSA
governments coupled with the mixed outcomes of SAPs (Easterly, 2005) ultimately failed to
create infrastructure, reform public institutions and create incentives for foreign private
companies to invest inwards. Indeed, one of the unexpected outcomes of SAPs was the
weakening of the “central apparatus” of the state, as well as creating an undesirable political
climate for leaders who relied on patron-client relations for their survival (Herbst, 1990).
1.2. Of the importance of state institutions to implement public policies and create incentives
for development
Economic development and growth are not incompatible with authoritarian regimes, as
long as the distribution of political and economic power is even between government and
public institutions and can create incentives for growth. Particularly, historical economic
successes showed that states had rights and duties that would nurture economic growth, such
as ensuring the credibility of state institutions and therefore their capacity to implement public
policies effectively; the enjoyment of high degrees of autonomy by workers and businessmen
to conduct their enterprise, in exchange for the provision of a functioning legal framework,
financial facilities e.g. credit and standards as well as the development of infrastructure to
create incentives. Indeed, East Asian “miracles” all reformed state institutions to acquire more
“Weberian” features and complement their public policies in addition to embracing certain
neoclassical recommendations e.g. trade and foreign direct investment liberalization. Public
policies in East Asia were implemented earlier and on a more fertile ground than in SSA, as

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Rodrik (1997) points out that education and human capital rates were much higher at the start
of the development path, and the distribution of land and income was more equitable. The
unprecedented rise of completion rates for primary and secondary education in SSA occurred
late compared to East Asian countries, but holds the same promise towards triggering the shift
from low-productivity industry to high-productivity.
Another constraint on state intervention in SSA derives from the economic dependency on
natural and mineral resources (Sindzingre, 2009); interestingly, East Asian “developmental
states” were all characterized by the absence of natural resources, therefore pushing the state
to guide production and create incentives to meet the global market’s needs. In SSA, the
unequal spread of market information does not allow producers to adapt to markets’ dynamics
e.g. manufactured products, which is particularly detrimental in economies where growth
depends on one industry. The presence of mineral resources also fuels the rent-seeking
tendencies of governments who then are not interested in promoting industrial diversification
or institutional reform. But regardless of how important constraints on state intervention in
SSA are, they do not mean that SSA states cannot foster development, but rather how long it
will take to overcome these constraints. Promising advances notably in education and
infrastructure relate to earlier phases leading to development from East Asian countries.
2.1. Delayed conceptual framework shift and lessons to learn from East Asian high-growth
developmental states
In the late 1990s, the World Bank and the IMF reviewed the conceptual framework of
SAPs as the first and second phases of Stabilization and Adjustment in SSA had given at best
mixed results, regardless of the degree of implementation of these programs in various states.
Indeed, the cuts in public spending, part of the policy recommendations of IFIs, had led to a
decrease of household income therefore reducing demand and supply for health services.
Mortality rates for infants and mothers had increased as well as infectious diseases; though a

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population which suffers from serious health concerns cannot commit properly to development.
World Bank Chief Economist Joseph Stiglitz had confirmed the conceptual reversal in the 1997
World Development Report when he spoke of “state rehabilitation” and emphasised the
importance of the states’ role in fostering growth. The departure from a market-oriented
approach towards a combination of market, industrial and public reforms along with a push for
infrastructure recalls the strategy of East Asian “developmental states” to foster sustainable
growth. However, despite the late conceptual shift, the IFIs policy package still embodied the
neoclassical paradigm and emphasis on “getting prices rights”, which had showed negative or
mixed results in SSA in the past.
Unmistakably, the lesson to be learned from East Asian “developmental states” is that they
questioned and successfully challenged the neoclassical paradigm and its resulting “one-size-
fits-all” policy packages, and this should give hope regarding economic development in SSA.
South Korea, Taiwan and Japan all engaged with development and industrialization rather late
compared to European countries, and tackled the task with heterodox methods (Sindzingre,
2009) at odds with the IFIs recommendations but confirming the post-WWII views on the state
intervention in the economy. Revenues generated from the agricultural sector – which was the
main industrial sector in South Korea in the 1960s – were reoriented through “intersectoral
transfers” towards other industries in order to promote them. Public policies were implemented
by functioning public institutions and created incentives to generate private investment and
boost growth, thanks to cooperation between civil society and the state, which in turn gave
legitimacy to the government. Industries were state-sponsored and guided in terms of
production needs, as market information was diffused accordingly, to meet the ever-changing
needs of the market. These exports-based economies and the path they travelled from
agriculture-based low-growth to heavy-industrialized high-productivity economies could be
reproduced in the Republic of Congo, which shows promising features, to the condition that

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the government commits to diversify the economy and build infrastructure, as well as
reforming public institutions to make them more efficient.
2.2 State intervention as key to development and sustainable growth
Tab. 1: Socio-economic facts in South Korea and the Republic the Congo
Republic
of Congo
Industry
value-
added (%
of GDP)
GDP
growth
(annual
%)
Exports of
goods and
services
(in %
GDP)
Gross
enrolment
ration,
secondary,
both sexes
(%)
Foreign Direct
Investment
Public
spending
76.6 3.4 87.3 54 2,179,856,146 n/a
South
Korea
Industry
value-
added (%
of GDP)
GDP
growth
Exports of
goods and
services
(in %
GDP)
Gross
enrolment
ration,
secondary,
both sexes
(%)
Foreign Direct
investment
Public
spending
expense (%
of GDP)
38.4 3.7 55.7 97 9,773,000,000 18.9
Source: World Bank data for 2011-2012. Tab. 1 shows differences and similarities between
South Korea and the Republic of Congo demonstrating results of constraints on the economy.
For example, GDP growth is similar in both countries but GDP in RC rests mainly on the oil
industry with a staggering 76.6% of GDP, while Korea diversified its economy from primary
to tertiary, traditional to high-productivity industries, showing a much smaller percentage share
of industry in GDP of 38.4%. Universal primary education has been achieved in RC but the
lack of secondary and high education infrastructures results in an insufficient enrolment ratio
for both sexes, a constraint on creating skilled jobs. Foreign Direct Investment is rather low
and mainly oriented towards the oil and construction industries, while the figures for public
spending are unavailable.

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In the line of the three major phases of development followed by East Asian
“developmental states”, the Republic of the Congo – which is a “low-middle income country
for the World Bank – today shares figures similar to those of South Korea during its first phase
of development, though their origins differ. Even though growth in the Congo is characterised
by fluctuations, the revenues generated from the oil industry are high could be reinvested in
another sector or infrastructure, like South Korea reinvested agriculture surpluses towards
developing its transport industry.
Source: World Bank. This graph shows percentage rates of GDP growth in the Republic of
Congo and South Korea for the years 1981-1985. It demonstrates the fluctuations of GDP
growth in the Republic of Congo mainly due to the fluctuations in oil prices, an industry on
which the economy depends. Dramatically high growth rates are followed by collapse, which
shows the difficulty of sustaining high GDP growth rates in a country that depends primarily
on one industrial sector. South Korea shows high and constant growth rates as it entered its 3rd
phase of development as it had diversified its economy and enjoyed high rates of state-
sponsored industrialization.
-5
0
5
10
15
20
25
1981 1982 1983 1984 1985
GDP Growth (annual%)
Republic of Congo South Korea

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In sum, the Republic of the Congo comprises several features that emerged late compared to
South Korea because of its constraints, but constitute a good basis on which to build a
sustainable economy leading to growth and development, to the condition that growth is the
result of domestic policies. Indeed, the significant revenues deriving from the oil industry could
be the starting point of a diversified export-based economy in the Congo, similar to that of
South Korea in its first phase. The state already enjoys foreign direct investment in the private
sector, particularly from China and France, investing in the oil, construction and natural
resources industries, but high education infrastructures are insufficient and require higher
public spending.
This essay has demonstrated that they are lessons to be learned from East Asian
“developmental states” for SSA and the way in which they went from underdeveloped to fully
developed countries in half a century; the model of an export-based economy with a diversified
economy can be achieved, particularly in the Republic of Congo, if the three phases of
development for a sustainable growth are followed coupled with a “strong state” which should
work on acquiring Weberian features through an increase in public spending to improve the
presence and efficiency of state institutions. Certain public policies are already underway in
the Congo such as the “emphasis on education”, “incentives for the banking sector and firm
financing” (Sindzingre, 2009: 10), but efforts need to be made towards developing an efficient
bureaucracy and “climbing the technology ladder” (Wade, 2000) which can only happen if the
state turns away from patrimonial tendencies and reinvest parastatals revenues into other
sectors and public infrastructure. Seemingly, the same political and economic constraints of
the post-independence period remain today as major obstacles to development: if political elites
would favour the national interest over their own, reinvest parastatals revenues to diversify and
modernize the economy, start taxing foreign-owned enterprises, increase public spending and

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attract more private investors, this could lift the nation out of the poverty trap of depending on
a single sector of the economy.
Bibliography:
 Adelman, Irma. 2000. Fifty Years of Economic Development: What Have We Learned?,
Paris, the World Bank, Annual Bank Conference on Development Economics.
 Easterly, William (2005) What did structural adjustment adjust? The association of
policies and growth with repeated IMF and World Bank adjustment loans. Journal of
Development Economics, issue 76, 1– 22
 Herbst, Jeffrey. (1990). The Structural Adjustment of Politics in Africa. World
Development, Vol. 18, No. 7, pp. 919-958.
 Rodrik, Dani (1997) “King Kong Meets Godzilla: The World Bank and the East Asian
Miracle,” in Albert Fishlow, et al., Miracle or Design? Lessons from the East Asian
Experience, ODC Policy Essay No. 11, pp. 13-38
 Rodrik, Dani (1998) Trade Policy and Economic Performance in Sub-Saharan Africa,
Working Paper 6562, National Bureau of Economic Research
 Rodrik, Dani. (2006). Goodbye Washington Consensus, Hello Washington Confusion?
A Review of the World Bank’s Economic Growthin the 1990s: Learning from a Decade
of Reform. Journal of Economic Literature, Vol. XLIV, pp. 973–987
 Sindzingre. Alice N. (2009) The many channels of the relationships between state
intervention and growth: can high-growth developing countries be examples for poorer
countries?, International Political Science Association 21st World Congress of Political
Science, Santiago: Chile

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 Wade, Robert H. (2005) Bringing the State Back In: Lessons from East Asia’s
Development Experience, in Independent Publishers Group, vol. 2
 Williamson, John (2000) What Should the World Bank Think about the Washington
Consensus? The World Bank Research Observer, vol. 15, no. 2, pp. 251-64.